As capitalism’s worst crisis since the 1930s continues, the last period has seen governments in Europe and internationally, after throwing trillions of euros at the banks and financial sector to prevent the collapse of their system, move decisively to force the burden of these bail-outs, and of the crisis generally, onto the shoulders of the majority of the population. They have imposed a series of savage budgets and cuts programmes. The “sovereign debt crisis” has its basis in the policies and actions of neo-liberal administrations over a whole period. It was greatly exacerbated by the bank bail-outs and stimuli implemented in country after country to fill the bankers’ begging bowls. This position has now become the defining part of the capitalist mantra, ‘justifying’ huge austerity packages which involve the slashing of social spending and attacks on wages and conditions.

These are fighting words for the socialists. No one knows what they are planning as a follow up to this. If nothing, it will blow over – but it maybe useful to keep your eye on this story. As you remember the Euro/Greek scare was solved with a wave of austerity across many of the Euroland countries. Many aggressive budgets were past – but have yet really to be implemented.  It is my take that some of it will get implemented but no where near what the market has priced in. My long term target of “near parity” for the Euro has not been hit and this could be the catalyst to get us there.

Be careful …

Market view:

Their earliest victories were in Oregon and Colorado, where Labor Day was declared to be a state holiday in February and March 1887, respectively. The next year the American Federation of Labor passed a resolution for the adoption of a Labor Day at its St. Louis, Missouri, convention. Thirty states had followed the lead of Oregon and Colorado by the time the first Monday in September was made a national holiday by an act of Congress, with the bill signed into law by President Grover Cleveland on 28 June 1894. In the early twenty-first century, Labor Day parades, rallies, festivals, and speeches were still organized by labor unions across the country and often supported by political leaders.

Because of the shrinking popular base of traditional labor unions, however, most Americans tended to regard the day merely as the finale of a long summer of fun in which hot dogs, barbecues, and picnics reigned. In addition, most Americans now believe unions are communist and some how evil. Its “ok” for companies to manipulated markets to their advantage as this is considered free enterprise. If workers do the same thing it is called communism. Makes sense right? In any case its a good thing we don’t need jobs, as the thumbnail chart shows, they are not coming back anytime soon.  Happy labor day …

Market view:

Eleven Chinese and German executives and six of their food supply and honey export companies were charged Wednesday with 44 counts of conspiring to illegally import Chinese-origin honey, including honey tainted with antibiotics, into the U.S. by mislabeling it as originating in other countries to avoid paying anti-dumping fees, Fitzgerald said. Why the foreign intrigue with something as benign and universally loved as honey? The one-word answer is money. Tens of millions of dollars, and that’s just what the field agents and federal prosecutors can prove at this point. These are not nickel-and-dime scams. “They are charged with conspiring to import more than $40 million of Chinese honey to avoid paying anti-dumping duties of approximately $80 million,” said Leigh Winchell, special agent in charge of Homeland Security Investigations in the Pacific Northwest. (HSI was formally known as ICE, or Immigration and Customs Enforcement.)

Free enterprise is the best system known to man to create wealth, but it does need government to ensure all players play by the rules for the greater social good of all. This is not communism !!! Unscrupulous business people try to scare you in to believing that they can continue their corrupt practices to ensure their profits. As all things in life we need a proper balance between unfettered capitalism and socialism that ensures for the greater good … its not a “black” or “white” issue.

Market view

The companies in the list range from ones that were hard hit by the slump, such as General Motors and Citigroup Inc, to better-positioned businesses including Verizon Communications Inc and Caterpillar Inc. The cuts also came at a time when the companies were increasing profit — 72 percent of companies announced planned layoffs even while earnings were rising, the study found.

“There is still this general notion that when CEOs slash a lot of jobs they are being the tough guy, making the hard decisions necessarily to make their company lean and mean and that it’s going to be a good thing for the bottom line,” said Sarah Anderson, global economy project director at IPS and the study’s primary author. “We are trying to encourage people to think long-term, that there are all kinds of costs to mass layoffs, in terms of morale problems with remaining workers, in terms of when you may have to rehire and train workers if conditions improve … It was more a way to boost their profits in the short terms and line the pockets of their CEOs,” she said. The study found that pay of the CEOs of the 50 companies that announced the largest layoffs rose 7 percent in 2009, at a time when overall compensation for the CEOs of the S&P 500 companies fell 11 percent.

So one can see the mentality of big business. One could say that they are just doing there job – which in a sense is true. There job is to cut every job that does not support their profitability – this is capitalism.  The real issue is what economic structure allows them to do this. The role of government is to set up the social rules for these people to operate economically. The rule that is missing is the rule that allows these companies get to the size they are, to be able to rule over us. So yes strengthen and enforce anti-trust laws, even at the expense of some economies of scale. Independence and liberty does have a price. Of course where big business becomes a criminal business is when they effect government policy to their benefit – against the social benefit – this is the real virus that has crepted into our economic system. They, CEOs, are hard at work to convince people through endless chatter on cable chatter box TV and their unknowing grass root supporters a.k.a. the “tea party people,” that they are right and the rest are communists. They are all hoping for a Republican landslide win this fall. Which could be nothing farther than the truth. In fact the exact opposite is true, the religious right will enslave us in a corporate communist government regime – where the non-democratic board room will decide your fate – and it will not be to your benefit.

Fight Big business AND Big government … both can equally steal your liberty !!!

Market view

The rating agencies’ grades of public companies and securities can affect a company’s ability to raise or borrow money and how much investors will pay for securities. The big agencies assigned AAA ratings to securities tied to risky subprime mortgages that later went bad and helped cause the housing bust. Afterward, the agencies had to downgrade many of the bonds as home-loan delinquencies soared and the value of those investments sank. Of course this is nothing more than corporate fraud and the SEC is letting Moody’s off the hook. Most of their fees are gained by the very people that they are rating. So its no wonder that they judge them good until they are not. To the unsuspecting pension funds, its nothing more than theft. Yes the game is rigged and if you try to make regulations tougher then the opponents of financial regulation will say – oh your hurting the business environment and hence I won’t invest in an economy like this.

What nonsense …

Market view

Meanwhile, for the third time in three years, the world has a new richest man. Riding surging prices of his various telecom holdings, including giant mobile outfit America Movil, Mexican tycoon Carlo Slim Helu has beaten out Americans Bill Gates and Warren Buffett to become the wealthiest person on earth. So while Mexico slowly sinks into anarchy and 1000s die, the rich get richer and the poor get poorer!!! Nice image for Mexico? I am sure this tycoon will tell us how many jobs he has created, of course the reported corruption and others that have lost at his expense is unclear but widely believed – the net of his good and bad most likely would be negative. A man that rich in a country that sits back and watches his country disintegrating must be morally bankrupt.

By now you may have gotten tired of these kinds of stories on Blue, but I keep pounding on the theme; “you can not have a thriving free market economy while there is all this nonsense going on.” Wall Street today has yet to apologize and make right their deeds over the past years … the day of reckoning comes closer – prepare your investments accordingly.

Market view

There is something very strange about a supposed TV News channel promoting a commercial talk show entertainer posing as a political leader. Its a bit creepy the direction politics is heading in America. Where else has commercial, religious and politics factors come together to create a positive event. Not many – but I can think of many negative ones. I call the event simply bizarre and one more thing that will cause America to simply stand divided and stall to find a direction … exactly the same direction the economy is going.

Market view

So in short the answer is yes, we have entered the liquidity trap. This means Fed policy (central bank policy)  is irrelevant and the Fed knows this. And now readers of Blue know it too. So whats the trade on this? First of all quantitative easing will not provide any stimulus to the economy, but will cause the inflation hawks to get excited and cause gold to jump, but in the end this will be temporary at best, so don’t be fooled. It also means equities will be in a slow melt down, as deflation is the enemy of stocks. Also this will be Dollar positive. The only thing that can change this scenario is some event shock that can be a game changer … but we could wait a long time for this. Praying for bad news is not exactly what most people have in mind … but the quicker to the bottom the quicker the change.

Market view

Agricultural land values vary across States and regions depending on the inherent quality of the land for agricultural production, and on competing demands for other uses, such as development. As of January 2002, the Northeast farm production region had the highest value of land and buildings, at $2,810 per acre, due in large part to the expected value of agricultural land for future nonagricultural uses. New Jersey had the highest average value of any State, at $8,000 per acre. At the other extreme, farmland values in New Mexico, which contains large amounts of low-value rangeland, averaged $220 per acre.

Farm land not a bad investment. So if Blue is to ever retire to his apple farm in the USA, we will need a genetically altered apple tree strain that does not need water …. in New Mexico. Perhaps you have better suggestions …

Market view

So while stock investors may take the recent spate of deals as a sign of confidence in the economy, they shouldn’t get too excited. With unemployment hovering near 10 percent, the latest wave of deals is unlikely to bolster the job market any time soon. Indeed, expect quite the opposite: Some of these deals are being driven by “savings,” an overused euphemism for layoffs. Moreover, many of the deals are being driven by a slowing of organic growth as companies with cash look to pump up their bottom lines. “If you can’t grow, how do you support your multiple?” Robert A. Profusek, head of mergers and acquisitions at the law firm Jones Day, asked rhetorically before answering his own question. “You do a deal.”

So the recent M&A activity is a reverse indicator, its indication that growth is no where in sight and the economy drifts and edges closer to the cliff.

Market view

Proof? Remember “This Time is Different: Eight Centuries of Financial Folly” by Carmen Reinhart and Kenneth Rogoff, two brilliant economists. They warn: “The lesson of history is there will always be a temptation to stretch the limits. One common theme, excessive debt accumulation — whether government, banks, corporations, or consumers — often poses greater systemic risks than it seems during a boom. We merrily roll along for an extended period, when bang … confidence collapses, lenders disappear, a crisis hits. History does point to warnings signs that policy makers can look to access risk — if only they do not become too drunk with their credit-bubble-fueled success and say, as their predecessors have for centuries, ‘This time is different.’”

Still you’re in denial? Can’t see, hear, believe? You hope it will all come back? Of course it will … once the final crash is finished. The economy will reset to “0″ one way or another.

Market view

Over the summer, we decided to change a couple of things on the Trader aka Television page and also decided to introduce a new project, called the Blue Point Project:

Trader Lounge Chat Room

As many people complained about the decreasing quality and the annoying style of some people at the chat room, we decided to change the room a little bit and make it a bit more of a serious Trader Lounge. Starting from September 1, you must have a Password (which is being handed over by me or Blue) to post something and see what others write. The CNBC feed (provided by iandoh on Justin.TV) and the Live Trading will still be available for everyone and can be watched without any password. To get the password, please contact us in the chat room till September 1 or write us an E-Mail to info@blue-point-trading.com  – Also, if you are new to Blue Point Trading, it would be nice if you could provide us with a little background of yourself and your trading experience.

The Blue Point Project

The Blue Point Project will start on around September 5. It will be a daily series at the end of the day about what happened during my Trading Day, my Trading Style and most importantly about my own Account. Yes, you heard it right! Starting September 5, I will give a daily overview about my Account Details such as Current Balance, Trades, PnL… Additionally, you will have 2 or 3 times per week the opportunity to watch me at a predetermined time trading and speaking live at the Trader Lounge! Also, for the transparency, I will post an official statement of my broker the following day!

How much money will be in the Account to start? Probably $ 17500

More Details soon…

All the best

Snobtrader

Well the corporate tax rates are at their lowest point in 60 years  (see thumbnail). Evidently they want them even lower in an effort to support the economy and have the benefits of the rich trickle down to the poor. You really think that dinking with tax rates will have any real effect on the economy? If this was true and with the lowest corporate tax rate in 60 years the economy should be be going at full steam – but is not.  Taxes actually need to go up to balance the budget. One might say, well cut spending – but when you ask on what? – you always seem to get a blank stare and fuzzy answers. This argument will be the battle cry for the mid term elections. My guess is that the people will buy the opposition argument and win, as people’s gullibility is a constant they seems to continue to pay dividends.

Market view

To our American readers – are they opening a Club Med near you? Hmmmm … funded by the creation of money from leverage of the central banks or maybe even your stimulus dollars at work? Do you feel as if we are getting poorer and they are getting richer? Good industrial policy over the past 30 years huh?

Market view

Here is a reprint article on one person’s report on the rules of successful wealthy traders:

1. They plan every single trade. EVERY SINGLE ONE.

Every trader I’ve talked with that makes money consistently knows the following about every single trade they take before they even begin entering a limit order into their trading platform:

a) the highest price they are willing to pay (if they are going long) or the lowest price at which they are willing to sell (if they are going short)
b) their profit target where they will exit if they are “right”
c) their stop loss where they will exit if they are “wrong”
d) the risk/reward ratio of the trade
e) the exact percentage of their account they are risking

Lots of traders do one or two of these things. Few do all of them. In simple terms they know exactly what they want to pay, how much money they anticipate making (or losing) and a very clear idea on the probability of the trade working out.

Although you might think that every great trader uses hard stops that are pre-programmed in, many don’t . However, they are highly disciplined and when their stop loss number comes up they are out. Most traders don’t have that type of hard-core discipline and so a hard stop loss is still their best option.

2. They stopped trying to pick tops and bottoms years ago

Nearly all of the classes, courses and webinars you’ll find on the Internet talk about using support and resistance of some type to find where a market is turning and how to get in before or while it does.

The funny thing is that only a very few successful traders I have ever talked to trade that way. Simply put, 95% of the traders out there that make money are buying higher highs and selling lower lows. They do the exact opposite of nearly everyone out there because they found out long ago that picking tops and bottoms is a sucker’s bet. One trader described it to me by saying that it’s much easier to just participate in what a market is already doing than trying to guess when that behavior will change. Flip-flop your strategy to agree with what the market is doing rather than guessing on when it will change its mind, and you’ll be in a much better position to make money trading.

3. They are patient with winners – and ridiculously impatient with losers.

Dennis Gartman is famous for boiling down great trading to one thing: “Do more of what is working and less of what isn’t.” Sure makes a lot of sense to me.

Most traders have a great deal of patience with their losers but get nervous about locking in gains and sell them to quickly – the exact opposite of what wealthy traders do. Wealthy traders realize that they may actually have more losing trades than winning trades so they quickly get out when they are wrong. It is the only way to ensure that they can give their winners the attention they deserve.

They coddle their winners and kick their losers to the curb without a second thought.

4. They trade one market. ONE

I’ve talked with great traders who can trade futures, forex and stocks at the same time. They are a gifted tiny minority.

The vast majority of successful traders concentrate on one market and become so comfortable with it that they begin to “know” the behavior of that market just watching price and volume. Test yourself – if you aren’t able to get rid of all your charts and simply look at price and volume to trade, you’re probably not concentrating enough on one market in order to know its moods. What we’re really talking about here, of course, is not the mood of the market itself but the moods of the market participants!

Focus on trading one market exceptionally well rather than try to trade whatever’s hot – that’s how wealthy traders do it.

5. Their benchmark for success is anything but money

Money changes everything. It sure does. We’re all in this to make money. The trouble is, when traders use the amount of money they make to judge their own success, something happens to them – to all of us, really – that clouds our decision-making ability.

Wealthy traders have realized this and instead focus on other things to determine if they’ve had a successful day. Whether it be how well they were able to execute on their trading plan (see rule #1), or their overall ability to predict short-term movements in whatever they are trading, they know that if they do those things correctly, the money will follow.

Yes of course the money is important. Any trader who says otherwise is a fool. Why else would we put ourselves through this daily ride. But there is something about making it a secondary focus that allows the best traders to make better decisions. The growing trading account simply becomes a nice result – a side benefit if you will – of making good decisions and reading the market well.

Market view